Illinois Seeks Medicaid Transformation

With thousands of new Medicaid enrollees expected in 2014 and beyond, will fundamental changes sought by the state be a boon or a bust?

By now, most Illinois physicians are accustomed to talk of changes in the Medicaid program. Enrollment in the program has nearly doubled in the past decade, and is set to surge this year as the Affordable Care Act’s expansion of Medicaid kicks in. Soon, over three million Illinois residents will depend on the program.

Meanwhile, Medicaid reimbursements to physicians and health care facilities in many cases do not even cover the cost of providing care, and serious questions remain about what this significant increase in enrollment may do to payment cycles and our state’s already-stretched budget. These problems have led to some very big-picture discussions of how to rebuild Illinois’ troubled Medicaid model.

Federal law may provide an opening for much-needed change. Section 1115 of the Social Security Act gives the Secretary of Health and Human Services (HHS) authority to approve experimental, pilot, or demonstration projects (through a process known as a “Section 1115 Waiver”) that give states additional flexibility to redesign and improve their Medicaid programs in ways that are not otherwise allowed under federal law. Waivers issued under this section have been in use for decades, including in Illinois, but now that the federally funded expansion of our state’s Medicaid program has taken effect, they are in the spotlight again.

The Illinois Department of Healthcare and Family Services (IDHFS) has released a draft waiver application that consolidates Illinois’ existing Section 1115 waivers and outlines a broad vision for restructuring our state’s Medicaid program. It includes significant changes to how physicians and institutions are paid, a wide range of public health efforts, and funds for training community health workers to help address many of the root causes of poor health in our state.

Physicians concerned with taking a holistic approach to the well-being of their patients may well applaud the goals of this proposal. Caution is warranted, however, as the draft application is relatively short on details for many of its components.

The positive elements within the plan include new Graduate Medical Education funding through Medicaid; loan forgiveness for physicians willing to practice in underserved areas; and pilot programs to reduce over-utilization of ERs as primary points of care. These provisions, if they are designed and implemented well, have the potential to make a significant impact in Illinois’ physician workforce and in the health of Medicaid patients around the state.

However, while the plan purports to expand and improve care to vulnerable populations in a more efficient and coordinated manner, the Illinois State Medical Society (ISMS) has concerns or questions about several elements in the plan. These include:

• Workforce. The plan appears to expand the scope of practice for some allied health professionals, and includes the creation of newly certified “Community Health Workers.”
• Managed Care. The rush to modify payment models and align them with improved outcomes, all within an increasingly capitated system, is accelerated by this proposal.
• Access to Care. ISMS has serious concerns about a lack of provider capacity consistent with the state’s desire for care coordination.

As always, ISMS will maintain a balanced position, working with the state to strengthen the positive elements while also expressing our concerns. We have submitted testimony aimed at helping address our concerns, and we are hopeful that many of our questions will be answered as more details are released. The final waiver application is expected to be submitted by the governor to the Centers for Medicare and Medicaid sometime in February.